June 13, (THEWILL) – The World Bank has said that monetary policy tightening by the Central Bank of Nigeria (CBN) may not rein in inflation as anticipated by analysts.
In its recent report titled, “Global Economic Prospects” on the outlook for the rest of 2024 and 2025, the World Bank pegged Nigeria’s economic growth rate at 3.3% in 2024, same as its projection at the beginning of the year.
Furthermore, the bank projected Nigeria’s GDP to grow at 3.5% in 2025. It explained that growth will pick up from the 2.9% recorded in 2023 due to the effect of the current administration’s reforms in the petroleum and forex exchange sector.
However, the report noted that the failure of monetary policy tightening by the Central Bank of Nigeria (CBN) remains a risk to the outlook.
“Growth in Nigeria is projected to pick up to 3.3 per cent this year and 3.5 per cent in 2025. After the macroeconomic reforms’ initial shock, economic conditions are expected to gradually improve, resulting in sustained but still-modest growth in the non-oil economy.
“In addition, the oil sector is expected to stabilise as production somewhat recovers.
“Risks to Nigeria’s growth outlook are substantial, including the possibility that the tightening of monetary policy stops short of reining in inflation,” the report stated.
THEWILL recalls that the Central Bank of Nigeria (CBN) has increased interest rates by a combined 750 basis points in 2024.
Members of the Nigerian business community have criticised the interest rate hike by the CBN, saying it is ineffective in tackling inflation across the country and hurts the real economy as it increases the cost of accessing capital.
The CBN, however, stated that the hike in MPR was necessitated to tame inflation, but that has not materialised, as the inflation rate was 29.0-% in January before the MPR hike but has increased to 33.69% in April 2024.
About the Author
Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.
